A Closer Look at Patent Troll Demand Letters: A Dangerous Problem that Must Be Fixed

We've been talking a good deal lately about the promising Innovation Act. And with good reason—it looks like the best chance we've had for real patent reform that would actually help those getting crushed by the patent system. The bill is not perfect, though, and has at least one glaring error: it does not address the serious harm that comes from patent troll demand letters.

Patent litigation is notoriously complicated and expensive, making it the perfect tool for patent trolls. Trolls use the costs of litigation as a threat to demand quick settlements. Even worse, they know how to ask for the right amount of money at the right time. Is your startup about to release a new product? Secure a round of funding? The perfect (and most dangerous) time for a troll to strike.

The letters demanding these payments are often evasive, failing to include details about the patents, who owns those patents, and the products or services that allegedly infringe. They fail to give recipients the information to make rational decisions, such as whether they should pay the troll, ignore the letter, or go to court to fight it. Just hiring a lawyer to ascertain that seemingly simple information can easily cost well into the tens of thousands of dollars.

The letters raise even more fundamental concerns, too. Because they happen before a legal complaint is ever filed, they are not part of the public record. And once a settlement or license is signed, it will likely include a non-disclosure provision, prohibiting the letter's recipient from talking publicly about its contents. This means that the scope of the problem is often underreported, making it harder for policymakers to understand the true scale of the patent troll problem.

We, along with a large coalition, launched Trolling Effects to combat this problem. Trolling Effects is a database of demand letters, open to the public. You can submit letters you've received, search others' submissions, and find out more information on the trolls and the patents they weild.

But in order for this tool to be successful, we need your help. We need you to spread the word and help us get as many letters into the database as possible. Each new demand letter is crucial to Trolling Effects, even if a nearly identical letter has already been posted. Each one provides key insights into the patent landscape: who the bad actors are, what patents are being asserted and how often, and who's being targeted.

If you have received a patent demand letter, submit it to Trolling Effects. The site has measures built in so particular items information can remain private.

Trolling Effects is an important tool to fight the dangerous barrage of patent demand letters, but we need a more long-term fix to the problem. Comprehensive patent reform legislation should require patent trolls to include enough information in demand letters to give its targets necessary information they need. It should also require that the trolls report on how many letters they've sent, and how often they've actually followed up with a lawsuit. The practice of sending demand letters to extort quick settlements is not one that the U.S. patent system should protect; we need real demand letter reform now.

The good news is that the Senate Commerce Committee is looking into these issues in a hearing this Thursday; EFF's own Julie Samuels will be testifying. We hope the Committee's interest is a sign of positive things to come.

Related Updates

The importance of the US Patent Office’s “inter partes review” (IPR) process was highlighted in dramatic fashion yesterday. Patent appeals judges threw out a patent [PDF] that was used to sue more than 80 companies in the fitness, wearables, and health industries. US Patent No. 7,454,002 was owned...

Trying to succeed as a startup is hard enough. Getting a frivolous patent infringement demand letter in the mail can make it a whole lot harder. The experience of San Francisco-based Motiv is the latest example of how patent trolls impose painful costs on small startups and stifle innovation. ...

President Donald Trump’s first State of the Union address last night was remarkable for two reasons: for what he said, and for what he didn’t say. The president took enormous pride last night in claiming to have helped “extinguish ISIS from the face of the Earth.” But he failed to...

EFF works to push back against unjustified sealing of documents in court cases, including in patent cases where improper sealing is practically routine. The public has a First Amendment right to access court proceedings and this right is violated when documents are sealed without good reason. Ultimately, we hope that...

If trolls don’t face consequences for asserting invalid software patents, then they will continue to shake down productive companies. That is why EFF has filed an amicus brief [PDF] urging the court to uphold fee awards against patent trolls (and their lawyers) when they assert software patents that are...

This year was once again active in terms of patent law and policy. Throughout it all, EFF worked to protect end user and innovator rights. We pushed for a rule that would end the Eastern District of Texas’ unwarranted dominance as a forum for patent litigation. We also defended...

Have you ever sent a motivational text to a friend? If you have, perhaps you tailored your message to an activity or location by saying “Good luck in the race!” or “Have fun in New York!” Now, imagine doing this automatically with a compuuuter. What a great invention. Actually...

On September 8, 2017, the multi-billion dollar pharmaceutical company Allerganannounced that it “sold” its patents relating to its eye drops drug “Restasis” to the Saint Regis Mohawk Tribe. But this was not a usual “sale.” The Tribe doesn't appear to have paid anything in exchange for becoming...

In a promising step toward transparency, the Eastern District of Texas (the court that sees many of the nation’s patent cases) recently announced an amendment to its Local Rules that would require parties to file redacted versions of documents that contain confidential information. Previously, parties would file whole...

A Misunderstanding of Data Leads to a Misunderstanding of Patent Law and Policy Bad patents shouldn’t be used to stifle competition. A process to challenge bad patents when they improperly issue is important to keeping consumer costs down and encouraging new innovation. But according to a recent post on...